Correlation Between ELECTRONIC ARTS and METHODE ELECTRONICS
Can any of the company-specific risk be diversified away by investing in both ELECTRONIC ARTS and METHODE ELECTRONICS at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining ELECTRONIC ARTS and METHODE ELECTRONICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ELECTRONIC ARTS and METHODE ELECTRONICS, you can compare the effects of market volatilities on ELECTRONIC ARTS and METHODE ELECTRONICS and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in ELECTRONIC ARTS with a short position of METHODE ELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELECTRONIC ARTS and METHODE ELECTRONICS.
Diversification Opportunities for ELECTRONIC ARTS and METHODE ELECTRONICS
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between ELECTRONIC and METHODE is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding ELECTRONIC ARTS and METHODE ELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on METHODE ELECTRONICS and ELECTRONIC ARTS is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on ELECTRONIC ARTS are associated (or correlated) with METHODE ELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of METHODE ELECTRONICS has no effect on the direction of ELECTRONIC ARTS i.e., ELECTRONIC ARTS and METHODE ELECTRONICS go up and down completely randomly.
Pair Corralation between ELECTRONIC ARTS and METHODE ELECTRONICS
Assuming the 90 days trading horizon ELECTRONIC ARTS is expected to generate 1.99 times less return on investment than METHODE ELECTRONICS. But when comparing it to its historical volatility, ELECTRONIC ARTS is 3.24 times less risky than METHODE ELECTRONICS. It trades about 0.37 of its potential returns per unit of risk. METHODE ELECTRONICS is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 840.00 in METHODE ELECTRONICS on September 4, 2024 and sell it today you would earn a total of 190.00 from holding METHODE ELECTRONICS or generate 22.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ELECTRONIC ARTS vs. METHODE ELECTRONICS
Performance |
| Timeline |
| ELECTRONIC ARTS |
| METHODE ELECTRONICS |
ELECTRONIC ARTS and METHODE ELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ELECTRONIC ARTS and METHODE ELECTRONICS
The main advantage of trading using opposite ELECTRONIC ARTS and METHODE ELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELECTRONIC ARTS position performs unexpectedly, METHODE ELECTRONICS can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in METHODE ELECTRONICS will offset losses from the drop in METHODE ELECTRONICS's long position.| ELECTRONIC ARTS vs. TOTAL GABON | ELECTRONIC ARTS vs. Walgreens Boots Alliance | ELECTRONIC ARTS vs. Peak Resources Limited |
| METHODE ELECTRONICS vs. TOTAL GABON | METHODE ELECTRONICS vs. Walgreens Boots Alliance | METHODE ELECTRONICS vs. Peak Resources Limited |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |